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Defying the Odds

Defying the Odds
New book about the 2016 election.

Saturday, August 24, 2019

Economic Warning Signs

In Defying the Odds, we discuss the tax and economics issue in the 2016 campaign.  The update  -- recently published --includes a chapter on the 2018 midterms. and explains why the Trump tax cut backfired on Republicans.

Paul Davidson at USA Today:
U.S. stocks tumbled more than 600 points Friday after President Trump vowed to respond to retaliatory tariffs announced by Beijing earlier in the day and ordered American companies to seek “an alternative to China,” sharply escalating a trade war that has roiled markets for months.

Investors had hoped for more talks between the U.S. and China in September after Trump delayed part of the latest round of tariffs on $300 billion in Chinese imports from September 1 to December 15.

“I think markets thought things were moving along,” says Chris Zaccarelli, chief investment officer of Independent Advisor Alliance. “We just learned things are worse…. substantially worse.”


“Now it seems the truce is off,” he added. “Now it’s anybody’s guess whether there will be talks in September.”

Damian Paletta, Robert Costa, Josh Dawsey, and Philip Rucker at WP:
Top White House advisers notified President Trump earlier this month that some internal forecasts showed that the economy could slow markedly over the next year, stopping short of a recession but complicating his path to reelection in 2020.

The private forecast, one of several delivered to Trump and described by three people familiar with the briefing, contrasts sharply with the triumphant rhetoric the president and his surrogates have repeatedly used to describe the economy.
...“Everyone is nervous — everyone,” said a Republican with close ties to the White House and congressional GOP leaders. “It’s not a panic, but they are nervous.”


Yun Li at CNBC:
U.S. manufacturer growth slowed to the lowest level in almost 10 years in August, the latest sign that the trade war may be exacerbating the economic slowdown.

The U.S. manufacturing PMI (purchasing managers’ index) was 49.9 in August, down from 50.4 in July and below the neutral 50.0 threshold for the first time since September 2009, according to IHS Markit.

Any reading below 50 signals a contraction. The survey is an initial reading for the month of August. The final figure will be released Sept. 3.

“Manufacturing companies continued to feel the impact of slowing global economic conditions,” Tim Moore, economics associate director at Markit, said in a statement Thursday. “August’s survey data provides a clear signal that economic growth has continued to soften in the third quarter.”
Chris Isidore at CNN:
The Labor Department is revising down the number of jobs that employers added to payrolls by 501,000 during the 12-month period that ran from April, 2018 through March of this year. The government initially estimated the economy added 2.5 million jobs during those 12 months, or just over 200,000 a month. Now it appears it will be closer to 170,000 a month on average.
...
The new figures don't suggest the job market is weak. A monthly gain of 170,000 jobs is enough to keep unemployment at its current low level. But it's not quite as hot as previously believed, and risks that unemployment will start to rise if employers slow their pace of hiring any further.
Rachel Layne at CBS:
U.S. Steel is temporarily cutting about 200 workers from its Michigan plant, highlighting the ongoing struggles of a company that President Donald Trump had showcased as benefiting from his administration's steel tariffs.

The layoffs, detailed in an August 5 notice with the state of Michigan, will cover "nearly every area" at the facility, U.S. Steel said in an emailed statement Tuesday. The company already temporarily cut 48 workers at the Great Lakes plant and expects to cut more more in September, bringing the total number of layoffs to 200.
Hints of trouble at U.S. Steel have been emerging in recent months, with the Pittsburgh-based company in June announcing it would idle two furnaces, one in Michigan and one in Indiana. The company said there isn't a "single event" prompting the layoffs. Rather, "Current market conditions are being impacted by a multitude of factors," including price, demand, import volume, cost and projected profit margins, U.S. Steel said in the statement.